NEW DELHI: Providing a fresh
avenue for foreign investors, the government today announced allowing overseas
investments in Alternative Investment Funds (AIFs) -- a new class of pooled-in
investment vehicles for real estate,
private equity and hedge funds, among others.
"Keeping in view the need to
increase investments from all sources, I propose to also allow foreign
investments in Alternate Investment Funds," Finance Minister Arun Jaitley
said while Presenting the Budget for 2015-16 in the Lok Sabha.
AIFs, which have been so far
facilitating domestic investments, are funds established or incorporated in
India for the purpose of pooling in capital from Indian investors for investing
as per a pre-decided policy.
Commenting on the proposal,
Equirus Capital Managing Director Ajay Garg said: "It will help NRI and
institutional participation which constitutes a big segment of investors being
targeted by the AIF. But the big challenge on tax treatment to avoid double
taxation for investors in AIF has not been addressed."
"Overseas investors may show
interest but it will depend on the fineprint whether such investors will get
any tax benefit or not," Quantum AMC, Head-Fixed Income, Murthy Nagarajan
said.
Under Sebi guidelines, AIFs can
operate broadly in three categories. The Sebi rules apply to all AIFs,
including those operating as private equity funds, real
estate funds and hedge funds, among others.
The regulator in May 2012,
notified the guidelines for this new class of market intermediaries.
The Category-I AIFs are those
funds that get incentives from the government, Sebi or other regulators and
include Social Venture Funds, Infrastructure Funds, Venture Capital Funds and
SME Funds.
The Category-III AIFs are those
trading with a view to making short-term returns and it includes hedge funds,
among others.
The Category-II AIFs can invest
anywhere in any combination but are prohibited from raising debt, except for
meeting their day-to-day operational requirements. These AIFs include private
equity funds, debt funds or fund of funds, as also all others falling outside
the ambit of two other categories.
Here is the Some Best
Investment Projects TDI
Kingsbury-Sonipat | TDI
City-Kundli Sonipat